It's not too often an ASX exchange-traded fund (ETF) rises 21% in an entire year. But 21% over just one month? That is a rare occurrence indeed.
Sure, April has been a great month for ASX shares and, by extension. many ASX ETFs as well. As it currently stands, the S&P/ASX 200 Index (ASX: XJO) is up a healthy 2.4% in April so far.
But let's talk about the BetaShares Crypto Innovators ETF (ASX: CRYP).
Crypto Innovators units were going for $2.33 each at the start of April. But today, this ASX ETF is asking $2.83 per unit. That means that this ETF has gained a whopping 21.5% or so over the past two-and-a-half weeks. That's a gain that exceeds the returns of the ASX 200 by almost ten-fold.
So what on earth is going on here that has allowed this ETF to give its investors such a lucrative return in such a short space of time, no less?
Well, to answer that, let's dig into what this ETF invests in.
The BetaShares Crypto Innovators ETF is a fund that is designed to track a basket of global companies that are all involved in the cryptocurrency sector.
We've all heard of cryptocurrencies like Bitcoin (CRYPTO: BTC) and Ethereum (CRYPTO: ETH). But with the crypto market maturing, there are now a bevvy of companies that facilitate the creation, exchange and use of these digital assets.
According to BetaShares, this fund "provides 'picks and shovels' exposure to the companies building crypto mining equipment, crypto trading venues, and other key services that allow the crypto economy to thrive".
Some of the companies that this ETF is invested in include Riot Blockchain, Microstrategy Inc, Galaxy Digital Holdings Ltd and Coinbase Global Inc.
Why has this ASX cryptocurrency ETF risen 21% in April?
Since most of these companies derive their earnings from the cryptocurrency markets, their fortunes rise and fall alongside the markets of cryptocurrencies like Bitcoin and Ethereum themselves.
And over the past few months, cryptocurrencies have seen a dramatic resurgence in value. Just take the flagship crypto Bitcoin. It was only back in late December that Bitcoin was going for just US$16,500 each.
But today, that same digital token will set an investor back US$29,500. Yes, Bitcoin is up a whopping 77.5% in 2023, including by 9.15% over the past month alone. It's a similar story with Ethereum and many other cryptocurrencies.
So with gains like this, it's no wonder that the companies that are in these assets' orbit are also seeing their valuations shoot through the roof.
To illustrate, Riot Blockchain stock is up a whopping 283% in 2023, and by almost 30% in April so far. Coinbase shares have risen by more than 100% in 2023, as has Microstrategy stock.
So it's not hard to see why this ASX ETF is adding so much value recently. As long as cryptocurrency prices continue to surge, we can probably expect this ASX ETF to keep climbing too.
But don't get too starry-eyed. The BetaShares Crypto Innovators ETF, while on fire lately, still remains down by more than 44% over the past year, and by close to 80% since the all-time highs of $12 a share that we saw in late 2021: